501(c)(4)

501(c)(4) organizations are generally civic leagues and other corporations that are supposed to be operated exclusively for the promotion of social welfare, or local associations of employees with membership limited to a designated company or people in a particular municipality or neighborhood, and with net earnings devoted exclusively to charitable, educational, or recreational purposes.

501(c)(4) groups have never had to disclose their donors, but were not allowed to take corporate or union money, otherwise they'd have to disclose their donors to the Federal Election Commission. But after the January 2010 Citizens United v. Federal Election Commission Supreme Court decision, 501(c)4 groups can take unlimited corporate and union money, still without disclosing.

Lobbying
Unlike 501(c)(3) organizations, 501(c)(4) organizations may lobby for legislation; they may also participate in political campaigns and elections, as long as campaigning is not the organization's primary purpose. There has long been a hanging question in campaign finance law, however, over just what constitutes a political communication or campaign.

Disclosure and lobbying
501(c)(4) organizations are not required to disclose their donors publicly. This aspect of the law has led to extensive use of the 501(c)(4) provisions for organizations that are actively involved in lobbying, and has become controversial, particularly since the 2010 Citizens United Supreme Court decision.

Tax exemption
501c4 of the Internal Revenue Code reads:


 * (c) List of exempt organizations
 * Civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare, or local associations of employees, the membership of which is limited to the employees of a designated person or persons in a particular municipality, and the net earnings of which are devoted exclusively to charitable, educational, or recreational purposes.

The tax exemption for 501(c)(4) organizations applies to most of their operations, but contributions may be subject to gift tax, and income spent on political activities - generally the advocacy of a particular candidate in an election - is taxable.

Related SourceWatch Resources

 * 501c3
 * soft money
 * The U.S. tax code and non profits